TMX faces pos­si­ble Nas­daq com­pe­ti­tion

Com­pany seeks ex­change sta­tus in Canada

National Post (Latest Edition) - - FINANCIAL POST - Dan Heal­ing

New York- based Nas­daq Inc. said Thurs­day it has ap­plied to op­er­ate an ex­change in Canada, a move that could bring for­eign com­pe­ti­tion to a mar­ket cur­rently dom­i­nated by the TMX Group, op­er­a­tor of t he Toronto Stock Ex­change.

Ac­cord­ing to a post­ing on the On­tario Se­cu­ri­ties Com­mis­sion web­site, Nas­daq Canada and its par­ent com­pany, En­soleille­ment Inc., have ap­plied for recog­ni­tion as ex­changes in Canada, start­ing the clock on a 30- day com­ment pe­riod to close Nov. 13.

Nas­daq is not cur­rently propos­ing to list is­suers’ se­cu­ri­ties and, if it de­cides to do so later, the OSC said its list­ing rules would have to be re­viewed, pub­lished for com­ment and pre­sented to the com­mis­sion for ap­proval.

Chi-X Canada, an al­ter­na­tive trad­ing sys­tem for the Toronto Stock Ex­change, was pur­chased by Nas­daq in Fe­bru­ary 2016. Ap­ply­ing for an ex­change li­cence was the next “log­i­cal step” for Nas­daq af­ter com­plet­ing tech­nol­ogy mi­gra­tion to ChiX, spokesman Joe Christi­nat said in an email.

He wouldn’t say when or if the com­pany will start list­ing se­cu­ri­ties but said it is talk­ing to clients about their needs. Asked what kinds of se­cu­ri­ties Nas­daq might go af­ter, he said it lists many as­set classes in­clud­ing eq­ui­ties, de­riv­a­tives, fu­tures, com­modi­ties and struc­tured prod­ucts.

Nas­daq Canada c ur - rently op­er­ates eq­uity trad­ing fa­cil­i­ties in On­tario as al­ter­na­tive trad­ing sys­tems for TMX’s Toronto Stock Ex­change and TSX Ven­ture Ex­change list­ings, with 66 sub­scribers and trad­ing of­fered in 4,100 se­cu­ri­ties.

“Nas­daq Canada will tran­si­tion its mar­ket op­er­a­tions from those of an ATS to those of an ex­change, with no sub­stan­tial changes to its cur­rent trad­ing plat­form or op­er­a­tions,” it says in its OSC ap­pli­ca­tion.

“Func­tion­al­ity cur­rently in place to sup­port the Nas­daq ATS trad­ing plat­form will con­tinue to be avail­able af­ter the recog­ni­tion date. ... Nas­daq Canada will op­er­ate a con­tin­u­ous auc­tion mar­ket Mon­day through Fri­day, ex­clud­ing Cana­dian bank­ing holidays.”

Richard Car­leton, CEO of the al­ter­na­tive Cana­dian Se­cu­ri­ties Ex­change — one of the few ex­ist­ing com­peti­tors to the TSX — said he doesn’t think much will change in the short term be­cause Nas­daq is not ini­tially ap­ply­ing to pro­vide list­ing ser­vices.

“With their ap­par­ent de­ci­sion not to pur­sue list­ings at this time, it’s not clear that there will be an im­me­di­ate im­pact on the com­pet­i­tive land­scape for trad­ing ser­vices,” he said in an email on Thurs­day.

“They are a well- re­spected in­ter­na­tional ex­change op­er­a­tor; as time goes on we would ex­pect to see an even more com­pet­i­tive mar­ket.”

Nas­daq could spur real com­pe­ti­tion in Canada if it de­cides to co- list in Canada tech­nol­ogy stocks it now lists in the United States s uch as Ap­ple Inc. and Microsoft Corp., said Jim Dale, CEO of na­tional in­de­pen­dent in­vest­ment dealer Leede Jones Gable.

“That would po­ten­tially cre­ate com­pe­ti­tion with the TMX. It would make it a much more at­trac­tive ex­change for other tech com­pa­nies to list on,” he said.

The CSE of­fers an al­ter­na­tive to the TSX Ven­ture ex­change but a cred­i­ble list­ing ser­vice by Nas­daq would pro­vide needed com­pe­ti­tion for the Toronto Stock Ex­change, he added.

The CSE lists more than 3 00 c o mpa­nies, ab o ut one- tenth the 3,142 list­ings as of Aug. 31 on the TSX and TSX ven­ture ex­changes.

Mau­reen Jensen, chair and CEO of the On­tario Se­cu­ri­ties Com­mis­sion, said Thurs­day staff at Canada’s big­gest se­cu­ri­ties reg­u­la­tor have re­viewed an ap­pli­ca­tion by Nas­daq to op­er­ate a stock ex­change in Canada but it hasn’t yet come be­fore the board.

TMX Group CEO Lou Ec­cle­ston said in a state­ment the com­pany is re­view­ing Nas­daq’s ex­change ap­pli­ca­tion.

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